By Karl Plume
CHICAGO, Feb 17 (Reuters) - Investments in agriculture
technology startups surged to a record $4.6 billion in 2015
despite a steep drop in U.S. farm income and slumping profit at
farm-affiliated companies such as machinery producers and seed
makers, according to a study released on Wednesday.
The investments were nearly double the $2.36 billion seeded
by venture capitalists and others in 2014, according to the
annual report from online food and agriculture investment
platform AgFunder.
The jump came as net U.S. farm income is projected to drop
for a third straight year and as industry stalwarts such as
equipment maker Deere & Co DE.N and seed and agrochemicals
company Monsanto (N:MON) Co MON.N face slumping sales and job cuts.
"There's definitely been a downturn in the broader market,
but ultimately the direction of agriculture is going towards an
more technologically driven future," said AgFunder CEO Rob
Leclerc.
Investments in 2015 were also noticeably less American, as
just 58 percent of deals were in U.S.-based companies, versus 90
percent in 2014.
Food e-commerce companies, including online grocers and meal
delivery services, raised $1.65 billion in 2015, led by hefty
funding rounds by COFCO CNCOF.UL subsidiary Womai, U.S.-based
Blue Apron and Germany's HelloFresh.
The sector was by far the year's most active with 36 percent
of total investment, leapfrogging 2014's top segment, bioenergy,
which faced headwinds from weakening oil prices. The e-commerce
segment's growth, however, could be limited by market
saturation, Leclerc said.
Drones and robotics investments grew by 237 percent from
2014 and AgFunder pointed to a bright future for the segment as
more growers are expected to use crop-scouting drones and
various autonomous farm machines for data analysis and precision
farming.
Satellite imagery company Planet Labs and China-based drone
maker DJI raised the most within the precision agriculture
sector. Also, 19 different precision agriculture software
companies raised capital in 2015 as more farmers are expected to
tap data science to boost yields and lower costs.
"Ag tech startups are capitalizing on the consolidation and
professionalization of farming. Lower commodity prices will
accelerate both trends," said Sid Gorham, CEO of farm management
software company Granular, which raised $21 million last year.
Concerns about climate change, sustainable farming and soil
health propelled investment in soil and crop technology
companies, which raised $168 million. Biotechnology company
AgBiome scored the sector's largest deal with investment from
the Bill & Melinda Gates Foundation, the venture capital arms of
Monsanto and Syngenta SYNN.VX and Pontifax AgTech.
(Editing by Matthew Lewis)